(Luận văn thạc sĩ) high turnover rate of petrovietnam in malaysia project

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TRẦN THỊ MỸ YẾN HIGH TURNOVER RATE OF PETROVIETNAM IN MALAYSIA PROJECT MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TRẦN THỊ MỸ YẾN HIGH TURNOVER RATE OF PETROVIETNAM IN MALAYSIA PROJECT MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: LÊ THỊ THANH XUÂN Ho Chi Minh City – Year 2018 ABSTRACT This thesis study high turnover rate in purchasing department of PVE, its reasons and its effect on company’s performance Turnover rate is more and more considered as an important factor to any business In depth interview was used to collect and analyze data of the study From the result of interviews, high turnover rate really exists in the company The three consequences of high turnover rate are productivity loss, delay of schedule, and turnover intention Job satisfaction in terms of pay and organizational commitment in terms of affective commitment were found to have negative relationship with high turnover rate This study also provides solutions and implementation plans for PVE to reduce turnover rate and increase its performance I INTRODUCTION Company Profile Background Petrovietnam Investment Consultancy and Design JSC (PVE) was set up from the equalization of State-owned Petroleum Investment Consultant Company (PVICC) April 10, 1998 from the equalization of State Owned Enterprise Vietnam Petroleum Corporation (Petrovietnam) In 2005, Petro Vietnam Engineering (PVE) turned into a Joint Stock Company Also, in 2011, hierarchical structure is exchanged to Mother - Mother Subsidiary The oil and gas industry are a key industry in the nation, with potential for improvement in the coming years PetroVietnam's technique keeps on connecting with global markets, open doors for PVE to infiltrate remote markets through PVN's tasks Right now, PVE has been allotted by Petro Vietnam to numerous significant activities in the business Particularly, after the consummation of the change into the parent-backup demonstrate, PVE reinforced its situation in the non-oil fields It working in wander and building consultancy for oil and gas, civil and industrial projects Key business activities:  Consulting on topographic survey, geological survey, current status survey, NDT test and technical services for offshore and offshore oil and gas, deep-water projects and other industrial projects  Consultancy on management of construction investment projects, supervision of projects belonging to the group or units of the Group, including projects on oil and gas, biofuels and other specialized projects  Implementing EPC services, providing project management and supervisory services in upstream and downstream oil and gas and other industrial projects; Providing consulting services on geological topography and non-destructive inspection and testing for industrial and petroleum projects’ Organization PVE’s mission PV Engineering's mission is to become the number one corporation in Vietnam and one of the leading companies in the region, providing high quality services at competitive prices to meet the needs of all customers Inside and outside Petro Vietnam 2 Problem Analysis Problem context In 2015, PVE become sub-contractor of TECHNICAS in RAPID project in Malaysia with contract value over 51 million USD in packages: SMP, E & I, Painting, Fire Proofing, Civil The RAPID project is one of the largest scale refinery projects in the world This petrochemical refinery has a capacity of 300,000 barrels per day and supplies naphtha and gas to petrochemical complexes and produces petrol and oil according to European standards Petrochemicals to increase the value of olefins from water separation towers and the production of commercial petrochemical products including propane, polyethylene, synthetic rubber In the domestic market, PVE has relatively few competitors, mainly foreign ones Therefore, the expansion of the Malaysian market will be an opportunity for PVE to improve its capacity as well as its position.In order to serve the project implementation, PV Engineering has the need of recruiting 250 engineers and 500 workers who have experience and project ad speak English fluently from difference position to work through recruitment website and newspaper In the first time of project, PVE try to recruit the local worker but the salary is quite high and they did not hard working if compare with Vietnamese worker After that, PVE - human resource change the plan to recruit Vietnamese engineer and worker to save money and achieve better results - Working condition: + The working time starts from 7:30 am to 10 pm, from Monday to Saturday + Transportation: From the living place to job site take 40 minutes by bus - Compensation: The Company will pay for food, house allowance and ticket back to Vietnam every six months working Benefit: one-month salary for bonus every end of Year if working above year - Living condition: + Accommodation: The Company rents the staff for a 40 'ride to the site + Water: In Johor Bahru, fresh water is very scarce and the dormitory which PVE rent did not have tap water Every day, the company will buy water from supplier to use Sometime per week, water for living is not enough Two-day bath time is very common + Food: Malaysia is a Muslim country, so only the Chinese markets have food such as in Vietnam The main food is chicken and beef, very rare green vegetables + Entertainment: On Sunday, staff can take ferry to Singapore, take bus to central city for coffee, shopping or stay at dormitory to play football, volley ball - Insurance: Employees will be insured under Vietnamese law - Recruitment expense: Item Expense (USD) 2015 2016 2017 131,579 186,886 158,721 26.12% 25.14% 203 287 243 648.17 651.17 653.17 Percentage (%) Number of employment recruit to replace Recruitment person) expense (USD/ This is the first project that PVE has executed abroad; hence, PVE can’t avoid problems relating to culture, working routine, communication among engineers, workers from many countries - Number of resigned employee from 2015 to 2017 2015 2016 2017 Jan Feb 15 18 Mar 13 10 Apr 12 11 May 13 Jun 11 Jul 12 Aug 15 11 Sept Oct 15 Nov 8 Dec 18 115 130 180 550 590 10% 21% 22% Total resigned employee Total employee % - Project status Complete Package Description % Contract date as Estimate complete Value Start contract time until (million date signed complete now usd) Civil & Building Package works and SMP Jul-15 Mar-18 Jun-18 87% 46 Jul-15 Jun-18 Nov-18 75% 24 Apr-16 Aug-18 Jan-19 82.17% 17 Jul-16 Sep-18 Aug-19 57% 12 Electro Mechanical Package works Package 11 Civil - Building 11 Package 6A SMP Based on the progress of the project, we can see that the project implementation time is slower than the time stipulated in the contract signed In Aug, 2017, PVE was invited to bid for two packages of 13 and 14 with a value around of 46 million USD However, due to high bidding prices and unpredictable progress from the previous contracts, PVE have been missed these packages There are many reasons for delaying the progress, but one of the main reasons that PVE has to deal with is the shortage of human resources and staff turnover The extension of the construction period compared to the original contract affects many parties involved in the project such as: Owner, design consultant, monitoring consultant, contractor construction Delayed progress reduces the credibility of the investment decision, for the investor The contractor have to increase costs, reduce the profitability of the project, reduce prestige and brand company To avoid this situation in future, we go to analysis symptom to know that why high turnover rate quite high and what should we to improve it.Symptoms analysis To justify the existence and importance of problem why high turnover rate high, the first interview was conducted with Human Resource Manager and 04 staffs who have leave and certain information about the issue to get their perceptions of the existence and effect of this issue in the organization From Interview with leave staff It is easy to see that when an employee resigns, they never say their true reason There are dozens of reasons given by employees, such as: feeling inadequate, inadequacy of job capacity, inadequacy of job requirements, inadequate culture / school of the company There are also very personal reasons such as getting married, wanting to go to school, wanting to quit work at home to take care of children, houses All of these are benign and not offend people, but for human resource management, we need to know the real reason to keep employees in the company The reasons above may be true, may be wrong for each person but it seems to have become some of the sample and "available to use" for employees looking to find another position In the meantime, the reason for the actual shift and could be difficult to say such as inadequate wages, inadequate corporate policies, or simply discord with a colleague in the company It may be because of your behavior: favoring one person over another, overemphasizing someone and having "shady" actions such as having a very private meeting with a member of a company / A group that other people in the same department cannot understand is happening or is there a new project or job? After conducting the interview with the leaving staffs, the main reasons of leaving are recognized There are three main reasons of leaving that include no attractive compensation, job stress and poor working environment Most of the leaving staff provided that they leave the company because the compensation policy is not suitable for them They shared that working abroad is especial job which is different to other jobs Their working time depends to project schedule which company signed with customer They have to day and night to keep the timelines According to one of leaving staffs, “When I interview, they just talk about working time from Monday to Saturday as normal but when I come here I have to wake up from 5am and working until 10 or 11 pm everyday” About Working environment, other guide complaint that “Very terrible We did not have enough water to washing, cleaning Sometime when I start to take a bath, the water is not enough The company pay for food and house but I cannot eat meal with Malaysia style And when I asked about compensation, most of them said that It was not fair One guide talks like that “I think it is low I work very hard, from 7am and back to dormitory around 10 pm My friend work in head office, he just working hours per days but he received bonus like me It is not fair Maybe in here, nothing is fair.” The interview investigated the main reasons of leaving are about the poor compensation policy, poor working environment and job stress To understand more about these policies, the interview with the Human Resource Manager is executed This interview with her will assist to find the way to solve the problem of the company From Interview with Human Resource Manager The interview with the Human Resource Manager to understand more about the compensation policy of company Also, it assists to recognize the reasons of setting up these policies After interviewing, it is found out that the HR manager had good evaluation on the performance of leaving staffs The HR manager said these staffs left the company because they did not have opportunities for promotion, job stress and low salary It seems to be that the HR manager did not know the real reasons but she also consider how to change it She explained that this policy was unfair for everyone and make them unhappy because they have to work harder if compare with Vietnam office The CEO did not know the difficulties of uncomfortable time when sale staffs comply with this policy At the beginning, the CEO thought if company paid high salary, the staffs had to be responsible to work hard However, after discussion, she understood that the compensation policy for abroad staff is so important to keep the high-performance staffs Good staffs will feel unfair when they contribute too much for the company but they not receive any thing The CEO stated that “If this is the reason that sale staffs leave the company, I will set up the commission policy to keep the good performance staffs because they are main staffs to earn the profit for company.” But how to change, she said “I think that must be change the thinking of Board of Director because you know, we are government company for long time before become joint stock company There are a lot of symptoms but we can find down three main symptoms as show below: Firstly, high stress on regular tasks, and the gap in term of working skills are the symptoms that were observed by the HR managers PVE This project require person who have experience in oil and gas civil work but not all of them have that The PVE staff shared their feeling about work overload because of the daily operation To explain for the symptoms, the project team staffs expressed that they have to face with a lot of difficulties: progress issues, political relations, technical risks, resources, safety pressure, language, A: After 01 year working very hard in here, I’m tired and I don’t know what will I be in the future, no promote, low salary, stress 4) Really, I don’t know about this issue I will represent it to supervisors Do you want to share more things? A: Yes, I have to work almost whole week and very tired after back from work, but the result which I receive in end of year is the same with office staff Do you think it fair? Thank you so much We should have a suggestion about this issue Have a nice day 37 Appendix 2: 2nd Round Interview: leave staff , Human Resource Manager and Project Manager Transcript Age 25 Location Ho Chi Minh City Gender Male Marital Status Single Occupation Civil engineering Salary 1,600 USD/ Month Working Experience at PVE 06 month 1) What factors contributed to your decision to resign? A: Hm I know that PVE is good company in Vietnam but in here I cannot promote because they just give the change to their family or friend For me, I didn’t know anybody who have power like that So, I think that I have to chance to find down another opportunity to promote 2) What factors of the new job attract you? A: Of course, it’s salary After that is promotion program 3) Do you feel you were suitable for current position? 38 A: It is not suitable, that’s a reason why I quit this job Could you let me know why it is not suitable for you? - I cannot stay at Malaysia for long time When I interview, they just talk about working time from Monday to Saturday as normal but when I come here I have to wake up from 5am and working until 10 or 11 pm every day When I interview, they didn’t tell me that I have to stay in job site year or maybe 02 year, 03 year until project finish 4) How you think about living condition? - Very terrible We did not have enough water to washing, cleaning Sometime when I start to take a bath, the water is not enough The company pay for food and house but I cannot eat meal with Malaysia style 5) Did you meet any difficulty in communication with your line supervisor/manage? A; Yes, sure He always gave me unclear assignment and add more job for me I’m procurement executive but when I came there, they ask me work like store keeper and admin work How can I improve my work in future? 6) How you think about the bonus/incentive structure for your position? A: I think it is low I work very hard, from 7am and back to dormitory around 10 pm My friend work in head office, he just working hours per days but he received bonus like me It is not fair Maybe in here, nothing is fair 7) How you think about your career development at PVE? A: No comment, I didn’t see any development policy in this company I am working like machine, day by day, from Monday to Saturday Could you let me know what I can learn in that project? 8) Is there anything the company could have done to prevent you from leaving? 39 A: Sure, there are thousands of thing that they need to to keep me The first thing I want to suggest is kick my director and replace by me He didn’t know how to run foreign project 9) What changes you suggest to improve your position and the company? A: Yes, they need to study project careful before start and listen staff more to improve working environment, salary ranking, incentive policy to adopt labor market 10) If company changing, will you consider coming back to the company? - If they have project in Vietnam, maybe I will consider 11) Thank you for your sharing Transcript Age 25 Location Ho Chi Minh City Gender Male Marital Status Single Occupation Civil engineering Salary 1,600 USD/ Month Working Experience at PVE 06 month 1)What factors contributed to your decision to resign? 40 A: Thank for your question After short time work with PVE, I recognize that the company culture is not suitable for me, especial is the way that manager promote someone Another thing is living condition, I cannot live in Johor Bahru anymore Working time is long, salary low and no commission… 2) What factors of the new job attract you? A: For me, I looking for a job with high salary and can develop in future 3) Do you feel you were suitable for current position? A: I think that, my characteristic is rather with current job requirement, except the location is not suitable for me 4) Did you meet any difficulty in communication with your line supervisor/manage? A: I don’t think my problem is communication, but have some issues with him He always give me difficult job and give very easy job to another that he likes Last time, he asked me to contact with supplier to rent a crane After I got quotations, he called another one and signed contract with him Maybe they gave him commission? Do you know that how much I have to try to get that quotation in Malaysia? Haiz 5) How you think about living condition? - It’s quite good because company pay for that, I can save money One thing I had complaint id the place who we live did not have tap water Total of engineer live in there around 500, and normally if I took a bath late, maybe no more water Last time, we kidding that in the future D.E.P is famous gift for birthday 6) How you think about the bonus/incentive structure for your position? A: It is not clear The company should adjust it to calculate the incentive following the sale income result, not following the company profit result 7) How you think about your career development at PVE? 41 A: It is not fair The company only promote their family member, no change for outside guide 8) Is there anything the company could have done to prevent you from leaving? B: Yes, of course Let me back to Vietnam to the project 9) What changes you suggest to improve your position and the company? A: They need to employee professional advisor to improve all policies to make the staff more happy and reasonable 10) If company changing, Will you consider coming back to the company? A: No, the policy is not only reason I leave company There are a hundred of thing to change and I make sure that they cannot change all 11)Thank you for your sharing Transcript Age 25 Location Ho Chi Minh City Gender Male Marital Status Married Occupation Civil engineering Salary 1,800 USD/ Month Working Experience at PVE 1,5 years 1)What factors contributed to your decision to resign? 42 A: You have to work in Malaysia, and the company le me back to Vietnam 02 times per year My wife didn’t like that She said my salary is not high So, why I didn’t back to Vietnam to find a job with same salary and can stay with my family After considering, I think its a good idea, so I need to quick immediately 2) What factors of the new job attract you? A: There are many factor effect to my decision, but I will consider the working location, it should be near my house After that is working environment, the second thing is salary When I interview to PVE, they said that they let me work in Vietnam But after 06 month, a lot of people resign So they require me to transfer the job 3) Do you feel you were suitable for current position? A: It is so so, the job requirement is suitable to me but the location is not My wife and my children also complaint me about time and no holiday 4) How you think about living condition in jobsite? A: Have you ever take a bath two-day one time? It is very common in jobsite And the food is not suitable for me They rent a Vietnamese chef but he stays in Malaysia for long time so his cooking style is not suitable for me And at weekend, no entertainment The internet is not good Sometime have, sometime not 5) Did you meet any difficulty in communication with your line supervisor/manage? A: Maybe, I think that I pick a wrong manager He unfair, messy in management He doesn’t know exactly what he want in his staff But I’m not care about that I’m sure that they never ask me quick the job until I want Laugh 6) How you think about the bonus/incentive structure for your position? A: It is not bad I we compare with other company in this field, it is just a little bit lower than ever but no thing difference between working in Vietnam and in Malaysia 7) How you think about your career development at PVE? 43 A: Forget about that when I joint this company, I know that I never get any opportunities to promote You know why, right? 8) Is there anything the company could have done to prevent you from leaving? A: No way, I give company a lot of chance to prevent my leave but they ignore You know, there are not only me leaving the company I work there more than one year and I know that nothing will be change in future Believe me So, event they everything, I don’t change me decision 9)What changes you suggest to improve your position and the company? A: BOD need to sit down to find down all conflict and issue in incentive policy and labor policy I suggest them to study competitor They build a nice policy and good environment for staff 10)If company changing, Will you consider coming back to the company? A: How about salary, promotion program? Do they change? If they change, maybe I will come back But I think that it just happen when you dreaming 11) Thank you so much for your idea Transcript Age 32 Location Ho Chi Minh City Gender Male Marital Status Married 44 Occupation Civil engineering Salary 1,400 USD/ Month Working Experience at PVE Years 1)What factors contributed to your decision to resign? A: My friend have introduce my another opportunities with higher salary and high level in Vietnam So, after considering in some week, I decide to cast new challenge 2) What factors of the new job attract you? A: For me, working environment, promotion and salary also will attracted me when I find another job 3) Do you feel you were suitable for current position? A: Totally no, I need to change my job I don’t know, but I didn’t feel happy with this job So I need to find another opportunities in other company 4) Do you have any comment in living condition? A: I never eat a lot of meat in my life before I joint this project 5) Did you meet any difficulty in communication with your line supervisor/manage? A: He’s ok and I don’t have any issue in communication with him But I think his English is not good, and That’s reason why I have to work by myself You know, without manager support, I don’t know what I following her requirement or not 6) How you think about the bonus/incentive structure for your position? A: It is not fair The manager takes too much and staffs just get a few pennies And nothing difference for bonus from project work and admin work 7) How you think about your career development at PVE? 45 A: I love your question, I never heard about in this company Please subject to our BOD be fair in promotion, maybe they forget to set up that program for this company 8) Is there anything the company could have done to prevent you from leaving? A: The mother company should change another BOD, find a new guide to create a better policy, better management and give me high salary 9) What changes you suggest to improve your position and the company? A: No way, there are many people event me to change to improve but they don’t listen You know, the company need to be restructure especially form top guide 10)If company changing, Will you consider coming back to the company? A: No way, I have my dream job So, nothing gonna change my decision 11)Thank you alot Transcript Age 36 Location Ho Chi Minh City Gender Female Marital Status Married Occupation Human Manager Working Experience at PVE Years 1) What are the problems that you think it is happening in our hotel? 46 A: With my field, I am headache about finding the new employees for project in Malaysia The requirement is 500 engineers but every year half of them resign Turnover rate is my concern now 1) Can you please explain more about the issues? A: We are belonging to the government company, so our basic salary is not really high compare with the market The rate is less than the market rate about 25-35%, or we can say that our salary is lower compare with the same position in Malaysia About bonus, we could not guarantee about the bonus with the new employees It not stables, and it based on our revenues, as well our parent company, it is the first thing that I could not find the qualify staff Secondly, engineer in Rapid project the special position, it need the human who have the huge knowledge about good communication, and speak fluent English Therefore, sometime, our company recruite some of the candidate without the civil background that they not understand about their position Then, they just work for the month, then they quit the job Thirdly, most of them complaint about living condition The place which we rent for them to live did not have tap water, so we have to buy water day by day and it is not enough for hundred of person use To save money, we rent a vietnamese living in Malaysia cooking, for me it ok but for them it is not suitable 3) About promotion program at the PVE, what is your valuation about that at PVE? A: I need to say sorry for the things if it makes you feel disappointed however, until now we didn’t have any program like that 4) Do you think training is another ways to motivate the employee? A: Of course, yes! It shows your concern about company with the employees Or, it makes employees feel like they can learn the new things, and not feel boring with their job However, at the moment, I observe that each manager in the different department 47 just on job training They not have the coaching, or training system for the whole staff, so it easy to lead to the conflict in decision making Transcript 6: Human Resource Manager 1) How you evaluate the performance of leaving staffs? A: All of them work hard and are responsible with the job I especially evaluate their very high performance 2) Do you know the reasons why they leave the company? A: Most of them told me that they want to have more opportunities and challenges in new area of job One of them has some personal issues and the last one said that abroad job was not suitable with her anymore because she didn’t want to work late She needs to go home soon to take care of her family They shared me their leaving reasons as above but I think that the main reason is that job stress and opportunities to promote Therefore, maybe they want to move to the other company to have more opportunities for promotion 3) Could you tell me the working hour policy of the company? A: Similar to the other companies and following the Labor Law, our company set the policy of working hours per day from 8am-5pm including hour of lunch time in Vietnam But for Malaysia project we set difference policy, working time from Monday to Saturday, and we will pay for them food, accommodation and transportation to jobsite 4) Could you tell me why the company set this policy? 48 A: I think that this policy is suitable for project work because PVE sign contract with main contractor base on price and timeline, and if we late, the will charge us lot of money This policy will help the company to manage time of staff effectively Everyone needs to comply with the policy of company, not except me I know they work hard, but if compare with Vietnam market, they receive high salary 5) Maybe you right, this policy is so effective to manage the time of staff but it may cause them stress because their working time is too long.? If this policy cause dissatisfaction for staffs and they intend to leave the company, will you change the policy? A: I will not consider changing it to be more suitable for them because business is business We need to follow project timeline, so, no choice for me 6) Could you share me about commission for Malayisa project? A: Actually, our company doesn’t pay extra commission for them However, we will pay the bonus for all staff (Vietnam and Malaysia) at the end of the year After one year, company will pay the 13th month salary Furthermore, I think that our salary is so high and competitive compare to other companies 7) I know that the salary is so competitive compare to other companies However, the compensation is also important for staff because it will motivate sale staffs to work hard If the company doesn’t pay extra commission for them, it seems to be unfair for the staffs because they work harder than Vietnam staff If they are not happy and leave the companies because of no compensation policy, you intend to set up new policy? Uhm At the beginning, I just think that our company pays high salary than other companies so that it may cover the commission Also, I believe that with the high salary, the staff will be happy to work here And when they received the high salary, they need to have responsibility to work hard for the company However, maybe you right, if we don’t pay extra commission, it will be unfair for the staffs who work hard If this is the reason that more and more staffs leave the company, but to set up the commission policy to keep the good performance staffs I think that must be change the thinking of Board of Director 49 because you know, we are government company for long time before become joint stock company Transcript 6: Project Manager 1) Hi, how are you Can you give me a minute to interview? A: I’m fine Yes I was ready 2) What you think about the human resource situation in Malaysia for the Rapid project? A: Since the beginning of the project, we have been dealing with a lot of human problems Almost every month there are people off work 3) Can you share why? A: I have talked to some of you, they have given the reason is the job over, long working time but the salary is low Previously, PVE had a 5-6-month salary each year But starting with the falling price of oil, we only paid 13 monthly salaries for both the office and foreign projects The oil and gas industry are no longer as potent as before You say you not get promoted when you work here because the whole is his grandson 4) Do you think it's time to change the way you manage your compensation policy? A: I think the board should reconsider the personnel situation There should be a professional consulting firm on how to improve 5) Do you think PVE can change? 50 A: PVE is a public company for a very long time After all, they are still carrying statestyle governance But in my opinion, when it comes to world markets, PVE must change to adapt and expand the market Due to inadequate human resources, the project tender has dropped a new $ million package So, I think PVE is forced to change its vision and strategy 6) Thanks for sharing 51 ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TRẦN THỊ MỸ YẾN HIGH TURNOVER RATE OF PETROVIETNAM IN MALAYSIA PROJECT MASTER OF BUSINESS ADMINISTRATION... business In depth interview was used to collect and analyze data of the study From the result of interviews, high turnover rate really exists in the company The three consequences of high turnover. .. deep-water projects and other industrial projects  Consultancy on management of construction investment projects, supervision of projects belonging to the group or units of the Group, including projects